Direct Selling in Indonesia

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Executive Summary

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TRENDS

Rapid growth of internet retailing in terms of value sales and relatively low operational costs compared to other retailing types enticed direct selling retailers to venture into internet retailing during 2015. For example, leading direct selling company Orindo Alam Ayu PT (Oriflame) joined internet retailing in 2015 although maintaining direct selling as its retailing core format. Players in women’s direct selling also increasingly leveraged e-commerce marketplaces to sell their products there to a certain extent, changing the retailing of direct selling from a personal and community landscape to a digital one. Players in direct selling that sell products through the internet were now able to capture a wider consumer base, although facing increasing competition from other players.

COMPETITIVE LANDSCAPE

Tupperware Indonesia PT retained its leading position in direct selling in 2015. With direct selling still its main retailing strategy, the company also started another marketing strategy through establishing showrooms in modern shopping malls in Jakarta during the year. The strategy is expected to generate a consumer base that requires physical knowledge of the products. Tupperware showrooms at the end of 2015 were located in Pondok Indah and Taman Anggrek mall, Jakarta. The showrooms also hosted marketing events; for example cooking demonstrations were held weekly to attract participants by inviting a celebrity chef for a demonstration, which eventually is expected to generate higher sales of the company’s products.

PROSPECTS

Direct selling will remain an important channel in Indonesian retailing in the forecast period. The thick social aspect amongst Indonesian communities will continue to facilitate direct selling. Furthermore, direct selling has increased its appeal in terms of a retailing channel as being more resilient compared to store-based retailing. Although direct selling is also going to face increasing competition from internet retailers, direct selling will be less affected as internet retailing will just empower members to broaden their networks and consumer base. Internet retailing will also empower direct selling retailers to speed up the purchasing process as members can directly order through their websites.

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